Title Insurance

Hello,

This month, I’m going to clue you in on an American product that made its way over the boarder twelve years ago and has been gaining popularity ever since: Title insurance.

Like any insurance contract, the goal of title insurance is to protect the insured against the risk of financial loss, in this case related to a real estate transaction. Before going ahead, the notary and his clients must evaluate the risk involved in the transaction. When the risks surpass the level of risk the buyers and advisor are prepared to assume, they have the option of acquiring insurance to counter these risks. There are two types of title insurance available, the owner’s policy and the mortgage loan policy, both apply to residential and commercial transactions.

Owner’s Policy

This policy insures the purchaser’s ownership right, as long as he/she remains the owner, against loss or damage that could occur due to a defect affecting the property’s title or on a larger scale, against cases of fraud or falsified documents, clerical errors or omissions on the part of the notary, outstanding taxes in spite of confirmations obtained, mistakes attributable to a cadastral renovation, defects or irregularities due to the absence of a certificate of location or an updated copy of the existing certificate, etc. More extensive coverage can be obtained from the insurer on request.

Mortgage Policy

This policy insures the creditor against possible loss if the title were vitiated or the mortgage non-opposable by a third party because of said defect. Moreover, this insurance is transferable and will follow the debt in the event of a cession or loan transfer.

Advantages and Costs

Generally this type of insurance remains the exception, but allows or accelerates the realization of transactions, which under normal circumstances could not take place and it significantly reduces the number of transaction cancellations. It provides the policy-holder with safe coverage with an average premium starting from $100 to $300 or more if the commercial consideration is superior to $300,000. When asked, the insurer may also supply a quote for a personalized plan.

In certain cases, the notary will withhold a sum to carry-out the correction of a title (minor exemption, servitude, judgment in legal recognition of right) as well as title insurance. In some cases, the lender may demand it. In any event, it acts as an emergency backup to facilitate certain cases.

For additional information do not hesitate to communicate with me at (450) 227-7077 or at (514) 745-6673 (NORD) or at (514) 688-3131.

About the Author:
Me Michel Labrèche. This column was prepared by Mtre Michel Labrèche, notary, practising in Saint-Sauveur-des-Monts and Laval for the past twenty years. Me Labrèche is also the president of Domaine le Sanctuaire des Lacs. For more information please see www.monlac.com.